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With over 80 percent of the country’s known oil reserves, Basra holds the key to Iraq’s economy. Without its revenues the central government in Baghdad would collapse. The struggle for power in Basra is central to the larger battle for control in the new Shiite dominated Iraq. This is a report from Basra by independent filmmaker Rick Rowley of Big Noise films. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

AMYGOODMAN: British authorities are preparing to cede control over the southern Iraqi city of Basra this month. But behind the transfer of power lies a struggle between three of the largest Shia political parties in Iraq: the Supreme Islamic Iraqi Council, which is America’s key Shia ally and was created and funded by Iran; the nationalist Sadrist Current led by Muqtada al-Sadr; and the Islamic Virtue Party, which controls the Basra governorate and is linked to the Oil Workers’ Union.

The battle for Basra is a battle for Iraq’s oil. With over 80% of the country’s known oil reserves, Basra holds the key to Iraq’s economy. Without its revenues, the central government in Baghdad would collapse. The struggle for power in Basra is central to the larger battle for control in the new Shia-dominated Iraq.

This is a report from Basra by independent filmmaker Rick Rowley of Big Noise Films. It was produced for Al Jazeera English by David Enders, Hiba Dawood and Rick Rowley, with the support of the Pulitzer Center on Crisis Reporting.

RICKROWLEY: We rode into Basra the same way we rode into most places in Iraq: with one of the militias that now control this country. Slums roll past outside the double window of the armored convoy. In the distance are the flares of Rumaylah, one of the world’s largest oil fields.

Today, we are traveling with a contingent from the governor of Basra’s 200-man security detail. Inside his heavily fortified offices, Governor Mohammad al-Waili of the Islamic Virtue Party tells us that he is under siege.

GOV. MOHAMMAD AL-WAILI: [translated] This is the fourth or fifth conspiracy against me.

RICKROWLEY: On his office television, the governor is accused of corruption, and Basra’s Provincial Council has called for his resignation. In the street, rival Shiite militias clash with his troops for control of the city. But the governor will not leave willingly and remains confident that neither political parties nor street militias can remove him.

GOV. MOHAMMAD AL WAILI: [translated] They can’t remove us by force. We are stronger than them.

RICKROWLEY: Al-Waili holds a meeting that seems staged for our cameras, highlighting the reconstruction programs that he claims sole authority for planning and executing.

GOV. MOHAMMAD AL WAILI: [translated] What was the budget in 2006? $170 million for 2006. The same amount for 2007.

UNIDENTIFIED: [translated] The projects are 85% complete.

GOV. MOHAMMAD AL WAILI: [translated] The projects are to build water treatment plants and sewage, and streets and equipment for electricity.

UNIDENTIFIED: [translated] And schools and clinics.

RICKROWLEY: But despite the projects, the governor’s life is in danger. He makes the five-minute drive from his office to his compound in a convoy of armored SUVs with dozens of troops and a truck mounted with a .50-caliber machine gun.

Basra is supposed to be safe. Al-Qaeda has never existed here, and the British are withdrawing their troops, claiming Iraqi police are ready to take over security.

So who is fighting here? And what is the battle for Basra about? Basra is Iraq’s economy. 80% of Iraq’s proven oil reserves are in Basra. And last year, its exports brought $31 billion to Baghdad. That’s 93% of the federal budget. What is at stake is control over massive oil revenues. Without Basra, the central government in Baghdad would collapse.

A new oil law was drafted that would create a federal oil and gas council to manage the country’s natural wealth. The council would be headed by the prime minister and largely under the control of the Shiite party that is America’s closest ally in Iraq: the Supreme Islamic Iraqi Council. But the law has been stalled in Parliament for two years.

PROF. JUANCOLE: Oil doesn’t seem to be under control in Iraq. No one in the Iraqi government really could tell you where all the money goes.

RICKROWLEY: Professor Juan Cole is one of America’s leading experts on Shia factions in Iraq.

PROF. JUANCOLE: And it has been alleged in the press that as much as $2 billion a year is being embezzled and smuggled, and it’s going straight into the coffers of the Shiite militias of the south.

PROF. JUANCOLE: In the south, the Islamic Virtue Party controls the governorate or province of Basra and therefore controls the refineries. The Islamic Virtue Party’s paramilitary provides the personnel for guarding the refineries. So, you know, possession is nine-tenths of the law. They really — the Islamic Virtue Party really possesses a lot of that resource.

When the al-Maliki government came in, in 2006, it was eager to displace the Islamic Virtue Party from its almost monopoly on the oil sector.

RICKROWLEY: Up until 2006, Governor al-Waili’s Islamic Virtue Party controlled the Oil Ministry, the Oil Workers’ Union and the governorate of Basra. But in 2006, the US-allied Supreme Islamic Council’s coalition replaced the oil minister with their own candidate, Hussain al-Shahristani. In July 2007, Shahristani outlawed the Oil Workers’ Union. Then in August 2007, Basra’s Provincial Council declared Governor al-Waili’s Basra administration illegitimate and called for his resignation.

The Basra Provincial Council has fallen under the sway of the Supreme Islamic Iraqi Council, America’s closest Shiite ally in Iraq and the force behind Prime Minister Maliki’s government. The Supreme Islamic Council is not based in Baghdad, but 160 miles south in the Shiite holy city of Najaf. And the only way there is on the most dangerous stretch of road in the world, the “Highway of Death.” We are escorted in another armored convoy, this time under the protection of the Supreme Islamic Council’s militia, the Badr Brigade, now working inside of the Iraqi army.

Amar al-Hakim is the acting head of the Supreme Islamic Iraqi Council. His uncle founded the organization in Iran, and its militia, the Badr Brigades, was formed under the leadership of the Iranian Revolutionary Guard. While the US publicly criticizes Iran for interfering in Iraq and calls the Revolutionary Guard a terrorist organization, it has allied itself to the Iranian-backed Supreme Islamic Council and has incorporated the Badr militia into the Iraqi army. Al-Hakim is in the paradoxical position of being both America and Iran’s most important Shiite ally in Iraq.

AMAR AL-HAKIM: [translated] Of course, we feel Iraqi must be open to the world and to the international community. There are mutual interests between Iraq and all of the countries in the world.

RICKROWLEY: The Supreme Islamic Iraqi Council was the big winner in the December 2005 legislative elections and has been the strongest force pushing for the oil law.

AMAR AL-HAKIM: [translated] Of course, I’m not an expert on oil. In Iraq, we were eager for experts to come here to use all the international potentials to develop an oil economy and oil institutions.

RICKROWLEY: That point of view is shared by Amar al-Hakim’s leading oil expert, Hussain al-Shahristani. His office is in the Ministry of Oil, a building famous for being one of the only sites the US military protected from looting. It remains physically undamaged, but seems dark and strangely empty when we arrive. The Ministry of Oil in the country with the second largest proven reserves in the world had no electricity.

An early draft of the oil law created a public outcry by advocating production-sharing agreements with foreign companies as the key to developing Iraq’s oil resources. But Minister Shahristani told us that the latest draft addresses this issue by establishing a federal council with the power to enter into a wide range of development deals.

HUSSAIN AL-SHAHRISTANI: This is up to the Federal Council for Oil and Gas, which is headed by the prime minister . The current draft does not prohibit any form of contract. It leaves it to the Federal Council to decide.

RICKROWLEY: But some opponents of the oil law still see Prime Minister Maliki as an American ally and worry that this current draft will lead to privatization and an American oil grab.

FALEHABOODUMARA: [translated] The law was written by the American administration, and it serves the American interest in Iraq.

RICKROWLEY: Faleh Abood, head of the Southern Oil Workers’ Union, has led several strikes against the government.

FALEHABOODUMARA: [translated] We achieved many things. We were able to raise salaries and get workers pieces of land. But what made people oppose us was our opposition to the oil and gas law.

RICKROWLEY: In fact, Oil Minister Shahristani used a Saddam-era law that the Americans left in place to declare the union illegal and has pledged to stop future strikes.

HUSSAIN AL-SHAHRISTANI: The law under Saddam was reinstated, so even after the fall of the regime, that was the law, and anybody who tries to disrupt oil production and export would be liable to government actions, because this would be considered as a sabotage of national economy.

RICKROWLEY: Back in Basra, the political storm is growing around Governor al-Waili, whose party is linked to the Oil Workers’ Union. Prime Minister Maliki has called for his resignation, and charges of corruption, mismanagement and fraud are circulating in the press. The Iraqi newspaper Kitabat alleged that he skimmed $80 million from reconstruction contracts.

We leave the governor’s compound to try to see what normal Basrans think of this crisis, but the governor refuses to let us go without an escort of twelve heavily armed guards. One man is brave enough to speak to us, telling us that he has not seen any of the $340 million worth of projects the governor claims are 85% complete.

BASRANMAN: [translated] There are no services, no reconstruction. There is a lot of fraud.

RICKROWLEY: When asked about political parties in Basra, this man is too frightened to say anything more.

BASRANMAN: [translated] I voted, but I’d rather not say.

RICKROWLEY: After that interview, the governor was reluctant to let us talk to anyone else in Basra or to visit any of his reconstruction projects. Claiming it was for our security, he locked us in a house on his compound, surrounded by soldiers. We escaped once in hopes of doing more interviews on the street, but were spotted before we even left the compound and firmly escorted back to our quarters by armed men. After being held four more days, we were taken to the airport and flown back to Baghdad.

The Maliki government and al-Hakim’s Supreme Islamic Iraqi Council are increasing their pressure on Basra Governor al-Waili to resign, but so far they have failed to remove him from power. The Supreme Council controls the Oil Ministry and the largest bloc in the Iraqi legislature, and its Badr militia is deeply entrenched in the Iraqi army. But the Basra governor also has a well-armed militia that protects him and that stands guard over the crucial southern oil fields and refineries.

PROF. JUANCOLE: As we speak, there is no proper government in Basra. It has been unseated, but won’t go, and the situation is deeply polarized. I think probably the only way to get al-Waili to step down would be for al-Maliki to deploy the 10th Army Division against the Islamic Virtue Party paramilitary. I mean, I think it would come down to violence.

RICKROWLEY: And it’s not just the governor’s Islamic Virtue Party that poses problems in the south for Prime Minister Maliki and the Supreme Islamic Council as they struggle to pass an oil law. They are also facing an increasingly fierce challenge in the street.

The Supreme Islamic Iraqi Council was an early ally of the American occupation and positioned itself to win seven out of the nine southern governorates, and if al-Waili falls in Basra, they will likely have eight.

This summer saw protests again the Council’s governors across the south. Demonstrations in Nasiriyah, Diwaniyah and Samawah had to be put down by force. Then, on August 12th, Governor Khalil Jalil Hamza of Qadisiyah province was assassinated by a roadside bomb. On August 20th, Mohammed Ali al-Hassani, the Council’s governor of Muthanna province, was also assassinated by a roadside bomb. This resistance in the south has been linked to the third force in Shiite politics: Muqtada al-Sadr’s Sadr movement and its militia, the Mahdi Army.

The Mahdi Army is not as well funded or equipped Iranian-backed Badr Brigades, but it is by far the largest militia in the country with an estimated 60,000 members. It now controls most of Baghdad. The Mahdi militia members would not allow themselves to be photographed, but they escorted us in unmarked civilian cars to Friday prayers in their Baghdad stronghold, Sadr City. The Sadrists draw their ranks from the Shiite lower class and are the most nationalist of the Shiite parties. Their spokesman, Saleh al-Obeidi, perfected his English in an American prison.

SALEH AL-OBEIDI: I have done a good course, because I have been detained for five months.

The decision which is discussed now in the Parliament, too much — it’s too much putting the future of Iraqi oil out of the hands of Iraqis. They are trying to steal Iraqi oil.

RICKROWLEY: The Sadrists have been strong opponents of the oil law and have criticized the Supreme Islamic Council for being too closely tied to the Americans. They blame the Supreme Council for the fighting in the south.

SALEH AL-OBEIDI: The people start to demonstrate, refuse the situation, look for and ask for something better. Unfortunately, the governors used guns against the people, they used campaigns of detention against those people who asking for a better situation.

RICKROWLEY: Amar al-Hakim takes pains to point out that his party is not responsible for fighting in the south either.

AMAR AL-HAKIM: [translated] The fight in the south is not between the Supreme Council and the other political parties. It is between the local governorates and outlaws.

RICKROWLEY: Neither the Sadrists nor the Supreme Islamic Council takes responsibility for fighting in the south. But the battle lines have clearly been drawn between the two sides.

PROF. JUANCOLE: What we’re going to see in the next few years is a battle, because if the Supreme Council could pick up all the pieces in the south, then it would have the Federal Oil Ministry and it would have the Basra oil facilities. And the problem that it faces is that at the grassroots level, everything that I’ve heard suggests that the Sadr movement is becoming more and more popular and the Mahdi Army is spreading. And so, you’re going to have potentially a big clash between where the people are and where the provincial government administrations are in the south.

RICKROWLEY: With the Islamic Virtue Party clinging to the crucial Basra government, the Supreme Islamic Council leveraging its political power in the Parliament, and the Sadr movement challenging its authority from the street, the battle for Basra could well determine the future of the country as a whole. Whoever wins there will control most of the country’s known oil and its wealth and will be the dominant force in shaping the new Shiite-run Iraq.

AMYGOODMAN: Rick Rowley of Big Noise Films, independent reporter who just came back from Iraq.

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